Greek crisis viewed from the corner store

For people who live in Greece these are troubled times: we know that. But what is to be done about them? Not a lot, but we carry on as best we can, sticking to routine, hoping feebly that pressing problems will go away, putting our heads in the sand, trying to forget that Greece has to cope with the IMF yet again.

I buy potting mix from shop-owner Panayiotis, who runs the mini-market he inherited from his father. I have known father and son for 30 years. Father Spiros was the youngest of a large tribe of brothers born at a time when Greece was experiencing truly dire poverty. Four of these brothers became monks at Mt Athos: I cannot know anything about their religious convictions, but they knew that no monastery would let them starve.

Somehow Spiros started his modest shop, and was doing well when I was first here. Since then he has retired, the market has become more complicated, there are a few more shops competing, and life has changed. In all sorts of ways. Still, son Panayiotis remains philosophical. Well, he's Greek.

'How do you see things at this stage of the krisi?' I ask, for I'm always asking people what they think of Greece's financial crisis, which is of course not just Greece's.

'Crisis? What crisis?' Pano grins. 'Greece has got a crisis; Greeks haven't.' (They're all inclined to be bush lawyers as well as philosophers, I think yet again, and sophist is a Greek word, after all.)

But he's got a point: café society shows no sign of dying, people continue to eat and drink out, and spending on cigarettes and tobacco seems quite unabated. Girls and youths still manage to dress to the nines, and everybody, just everybody, has a mobile phone.

That's the surface, of course. Lift a layer or two, and then the suffering is revealed: the old scrimp and try to save, the unemployed young are angry and frustrated, the sick have to make do with inadequate care. And a multitude of immigrants scrapes along; who knows how?

Says Pano: 'Perhaps it's all to the good; perhaps we'll come to our senses at last, and things will work out.'

Here's hoping. While Pano does quiet but regular business in this village, Syntagma Square, the heart of Athens, has been packed with thousands of people since 25 May. Protest is mainly anti-bank, and anti-MP: on 31 May, more than a dozen MPs had to be rescued by police after protesters blocked a parliamentary exit.

As well as many passionate speeches by day and by night, there is much clanging of pots and pans, in a gesture that symbolises the basic level to which many Greeks have been reduced. That gallant old war-horse and genius, Mikis Theodorakis, has been on a podium out there, blaming the political system for the current mess. Well, he's seen a few messes in his time.

The latest mess centres on the German conviction that Greece cannot repay its enormous debt, and that said debt must therefore be restructured. I am clueless about such things, but a friend who is an expert in financial matters did his best to put me straight.

'There is considerable contagion risk in extending the maturities of Greek loans, and so German banks are terrified. Still, Greeks may continue to receive European charity. It might be yet another instance of captive Greece taking her captor captive. Look at it this way: if you owe a bank a million dollars and can't pay, you're in trouble. If you owe banks 60 billion dollars and can't pay, they're in trouble.'

I'm not used to coping with all those noughts, and hate the thought of such trouble, but am trying to look at the awful problem every which way, really, while not getting very far with the kaleidoscope. Although one thing seems clear: Greece's ratings are now below those of Egypt and Venezuela.

Another thing that seems clear is that the krisi has divided Greek society very sharply. There have, of course, been terrible divisions in the past: the effects of the civil war linger on. At this very trying point, I can but hope with Panayiotis that things will work out.

Gillian Bouras is an Australian writer who has been based in Greece for 30 years. She has had nine books published. Her most recent is No Time For Dances. Her latest, Seeing and Believing, is appearing in instalments on her website.

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Here's the problem Gillian:
1. Too many people in Greece rely on welfare and public sector non-jobs for their income.
2. Not enough people are in productive work and paying taxes.
3. The government has to borrow outside the country to make up the deficit.
4. The government can't raise taxes or reduce welfare because that impacts directly on their predominant constituency.
5. Eventually the government must default on the loan repayments.
6. After this happens, the government can no longer borrow money to pay the pensions and the public servants. Or can borrow only at high rates of interest that reflect the risk being taken by those who lend the money.
7. The government is voted out and is replaced by another who claims to be able to fix the mess.
8. The only way they can fix the mess is to reduce welfare and public service payments.
9. The population either accepts the fall in living standards or anarchy sets in, resulting in a further fall in living standards.
10. Greece becomes a low-production-cost country and (hopefully) its industrial base revives with foreign investment and unemployed public-sector workers are forced to go out and get a real job (and pay taxes).
11. Living standards improve.

An I cynical? No, this is just what will happen.Ian | 15 June 2011

Ian - you forgot to mention the class of very wealthy Greeks (those who run the financial and political systems): did they have no role in creating the crisis, or part to play in solving it?

As for recommending Greeks lower their living standards to attract low-production-cost industry ... how low should they go? To compete with Vietnam, Bangladesh, Nigeria ....Russell | 15 June 2011

Ian is right. The Greeks need to liberate themselves from the old 'job-for-life' mentality especially in the public sector. Even that corporatist mentality of one job for life in Japan has long gone belly up.
Corporations and governments are obsessed with surpluses and paying off debt all in the name of efficiency and productivity. Quite often neither result.
Under Solon in the 6th C BCE, Athens defaulted on public debt and entered a period of great prosperity. As late as 1982-83 Mexico did the same and bounced back. Maybe the PIGS, the IMF and the EU Central Bank should meditate upon this mystery!David Timbs | 15 June 2011

Defaulting on debt is a two-edged sword. Many Americans have defaulted on mortgage debt, reducing their debt-to-income ratios. The upshot, however, is that it is now almost impossible for even qualified American borrowers to get new mortgages from banks, and over time the mortgage rate will be measurably higher than it otherwise would have been.Sanford Rose | 15 June 2011

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